Nifty Services Index Set To Outperform Again

Here's the Nifty Services vs Nifty 100 ratio briefly undercutting long-term support and quickly reclaiming it, confirming a failed breakdown and bullish momentum divergence. This support level also happened to be the 61.8% Fibonacci Retracement of the ratio's 2016-2020 rally, making it an even more important level.

Click on chart to enlarge view.

Given the fast move to the downside that resulted from the ratio's failed breakout in March, we're looking for a similar sharp move to the upside following this failed breakdown.

In other words, we'd expect some meaningful outperformance from the Nifty Services Index and its components.

We know that this index itself isn't a tradeable vehicle, so we've below is the list of stocks in the index, its largest holdings, and sector weightings. This should be a good starting point for people looking for stocks to trade on the long side.

Overall, we remain cautious in the near-term and expect a pickup in volatility/selling pressure as the Nifty 50 and other major indices run into with overhead supply. Under the surface there will still be plenty of stocks going up and going down, and relative strength exercises like this help identify the ones we want to be involved in.

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Thanks for reading and let us know if you have any questions!

Allstarcharts Team